Chinese leader takes aim at currency critics, says exchange rate swings can threaten markets

more images

more images

China’s president fires back at currency critics

TORONTO — Chinese President Hu Jintao fired back Sunday at critics of his currency policy by warning that wildly fluctuating currency exchange rates can threaten financial markets.

His speech at a global economic summit didn’t address complaints from the United States and others that an undervalued Chinese currency gives Chinese exporters an unfair advantage in global trade. He did speak of the fallout from currency swings and the resulting harm to markets from that “persistent volatility.”

The value of the yuan, or renminbi, is a major irritant in U.S.-China relations. Some in the U.S. say a swift revaluation of the yuan is crucial to the global economic recovery.

Before the summit, China said it would start allowing its currency to rise in value against the dollar. But senior Chinese officials have pledged during this weekend’s meetings that outside pressure would not force them to let the yuan strengthen more quickly.

Critics in the U.S. Congress and elsewhere want bolder moves from China.

President Barack Obama and Hu met on Saturday, and White House officials said Obama welcomed as a “first step” China’s currency announcement. Obama also said it would be important to see how Beijing puts that decision into action.

China has said its currency is at about the right level and that trade imbalances stem from fundamental problems in the U.S. and other countries in the West.

Hu said in his speech that China is “soberly aware” of the many challenges it faces: a large population, the stark contrast between the wealth of its booming cities and its poor countryside; major environmental problems; and a weak economic foundation.

He advocated a “cautious and appropriate” exit from economic stimulus packages and warned against trade protectionism. “Developed countries should promote international trade with greater openness,” Hu said.

Trade friction, which has plagued U.S.-China ties, should be handled through talks, Hu said. He said that “the deeper impact of the international financial crisis is yet to be overcome.”